Will Volatility Subside Anytime Soon?

The beginning of 2022 has already seen some chaotic swings in the market—and we’re only a month in. Will the recent volatilityA measure of how large the changes in an asset’s price are. The more volatile an asset, the more likely that its price will experience sharp rises and steep drops over time. The more volatile an asset is, the riskier it is to invest in. subside? And if it doesn’t, how should investors adjust? Chief Investment Officer Jim Lowell dug into what’s behind yo-yoing market action in our recent webinar, DiversificationA strategy for managing investment risk by investing in a mixture of different investments. Since different asset classes face different risks, even if one type of asset declines in value, others may not. Is Dead…and Other Modern Myths.*

Please enjoy the excerpt below and click here for the full webinar replay with more informed insights you can use. 

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Jim Lowell:

The absence of volatility is more abnormal for the overall market than its presence. Investors got used to a period where volatility was low. Now we’re back in its throes. We don’t think it’s going to subside anytime soon. But remember, like inflation, volatility isn’t only a negative. It creates opportunities for long-term investors like us to put more money into our best ideas at discounted prices.

We view asset allocation as a way to help smooth the level of volatility that the fundamentals suggest we’ll see. We’re also quick to adapt and evolve our investment views based on the facts, not fears.

The fundamental facts suggest to us that this is an economy that’s going to continue to rebound. We know that volatility’s not going to be a stranger. But nor should it be (and nor should you be unnerved by it)—rather, take advantage of it over the long term.

And, in the near-term, one of the chief ways to manage volatility is to focus on a discipline of diversificationA strategy for managing investment risk by investing in a mixture of different investments. Since different asset classes face different risks, even if one type of asset declines in value, others may not., something that’s stood the test of time for us.

Click here for a replay of Diversification Is Dead…and Other Modern Myths. Please contact us at (800) 492-6868 to learn more about comprehensive wealth management solutions.